Free Daytime Electricity Will Save Everyone Money — Including Renters

The government’s Solar Sharer Offer will make free electricity available for three or more hours around midday.

I’ve heard this called a dumb policy that won’t lower costs because it will just shift them around, causing people to pay more at other times and in other ways to make up for what they get for free.  But this isn’t true!

By that I mean, it’s not true that it won’t lower costs.  It will make electricity less expensive than it otherwise would be for everyone.  But the cost shifting stuff?  Yeah, that is going to happen, but it doesn’t really matter.  No one will have to use these plans unless they want to.

The Solar Sharer Offer In A Nutshell

The Solar Sharer Offer scheme will require electricity retailers to offer residential plans with 3 or more hours of free daytime electricity.  It’s set to begin July 1st, 2026, in NSW, SE QLD, and SA.  However, its details aren’t finalised, as the federal government is undertaking consultation on how it should work.  Here’s the information they’ve provided so far.

While these free midday electricity plans are definitely likely to include higher rates at other times and/or higher supply charges compared to plans without free electricity periods, they should still be worthwhile for a wide range of households and will help lower the cost of electricity for everyone — including renters and others who may be unable to install solar and/or batteries.  This includes those not using the free electricity plans.

The Solar Sharer Offer will lower electricity costs in two main ways:

1. It will shift demand to the middle of the day.  This will lower generation costs and dramatically reduce the curtailment of renewable generation currently causing large amounts of clean energy to effectively go to waste.
2. It will lower peak demand, which will avoid or reduce the need for expensive grid upgrades.

The first effect will help lower costs as soon as people start using the plans, while the second will be of most benefit over the medium to long term.

Solar’s Not Stopping

Over the past year, 20.2% of Australia’s electricity came from the sun, with 13.6% from rooftops and solar farms supplying another 7.5%.  For the states that will be getting plans with free daytime electricity in July, the percentages are:

• NSW:  Rooftops 12.2% + solar farms 10.5% = 22.7%
• SA:  Rooftops 22% + solar farms 5.8% = 27.8%
• QLD:  Rooftops 13.9% + solar farms 9.6% = 23.5%

Solar’s growth has been rapid.  In 2014 not a single state was even 1% solar powered but now the sun is Australia’s second largest electricity source after coal.  The rate solar capacity is being added hasn’t slowed.  In QLD and SA it has more than doubled over the past 5 years, while in NSW it has more than tripled.  The country has over 42 gigawatts of solar panels and will add around 6 more gigawatts over the next year, with most of it going on roofs.  Before long, it will be our largest single source of electricity.

Shifting Consumption To Free Periods

Just in case its name hadn’t clued you in, I’ll let you know solar generation occurs during the day, with the bulk of it in a couple of hours on either side of noon.  Now you might think all this solar power has to go somewhere.  But, unfortunately, it often doesn’t.  On clear days, it’s common for solar energy to be wasted.  Its output is curtailed, which means it’s deliberately reduced.  This happens to wind power as well, but it happens the most to solar farms, with an example given in the graph below.

This graph from Open Electricity shows the dark yellow of solar farms providing power during the morning in South Australia, but then it almost disappears from 11:30 am to 3:00 pm as it’s curtailed.

Free electricity in the middle of the day will dramatically reduce the curtailment of clean energy because people will take advantage of it by:

• Putting electric hot water systems on timers so they turn on during free periods
• Running appliances such as pool pumps, dishwashers, and clothes dryers
• Heating or cooling homes
• Charging electric vehicles
• Charging home batteries

Reducing electricity demand during the rest of the day and shifting it to the free periods helps soak up any surplus solar, as well as surplus wind generation, that otherwise would have been curtailed.

This will immediately lower average generation costs, because curtailed energy is basically free.  It will also reduce the amount of more expensive electricity consumed in the evening and other times.  This will lower costs for everyone, whether or not they use a plan with free electricity periods or have solar or a battery.

Because home batteries will also be charged during free periods, this will improve their ability to reduce electricity demand during the evening peak and into the next morning, and this will also help lower average generation costs.  Batteries will eliminate the need for gas generation on most days and because natural gas is expensive, this will also help lower prices.

Replacing gas hot water with a heat pump that can be configured to use electricity during the middle of the day is one way to make the most of the Solar Sharer plan.

Grid Capacity

The grid only has a limited amount of capacity.  Simply put, this is the grid’s ability to supply power when and where it’s needed.  If the peak demand for electricity exceeds the grid’s capacity to supply it, blackouts occur.  These really annoy people and are bad for the economy, so both grid operators and politicians are desperate to avoid them.  Things with the potential to increase peak demand include:

• Home electrification and getting off gas
• The switch to EVs
• Population growth
• Increasing wealth, resulting in higher energy consumption

Expanding grid capacity is really expensive.  I don’t mean it’s a bit pricey, I mean the cost of grid infrastructure upgrades these days are nuttier than a lumpy chocolate bar.  But once the capacity is built, it’s cheap to use.  If we ignore the generation side of things and only consider getting power to people, then as long as its limit isn’t approached, running the grid costs the same whether it’s used at 90% or 10% of capacity.  So anything that consistently reduces peak electricity demand and shifts it to a time when the grid isn’t under stress has the potential to avoid massively expensive grid upgrades.

Thanks to more than 4 million rooftop solar systems installed across the country, grid capacity never comes close to its limit around midday.  Even on the cloudiest of days, rooftop solar produces enough power to take a load off transmission lines and substations by generating electricity in the same place it’s used.  The periods when grid capacity is under the most strain are in the late afternoon and early evening during summer heatwaves, and around breakfast time in spells of exceptionally cold winter weather.

By shifting demand away from these times, free middle-of-the-day electricity reduces peak demand and the need to spend money upgrading the grid.

Better Use Of Home Batteries

The federal battery rebate was introduced on July 1st this year, and since then, home batteries have been selling like hotcakes.  (Or in the case of Sigenergy systems, too hot cakes.)  Over 100,000 systems, with around 2 gigawatt-hours of capacity, were installed over the past four months.

The massive amount of battery storage being installed will cause a large decrease in peak demand.  But the scheme has a problem.  At the moment, a lot of the installed battery capacity isn’t nearly as effective at reducing peak demand as it could be.

The issue is, during a summer heatwave or winter cold spell, most home batteries will do a great job of reducing peak demand — on the first day.  But after that, a portion of home batteries will simply run out of energy.  Many battery households have solar systems with 6.6 kilowatts of capacity or less.  If these homes have ducted air conditioning or multiple split systems, then they may struggle to charge their batteries on days of extreme heat.  Because home batteries rarely start the day completely drained in summer, they’ll often power the home through the evening peak on the first day of a heatwave, but may go flat before that on the second day.

Homes with large solar systems normally have no trouble keeping a battery charged through heatwaves, but even large solar systems may struggle in winter cold spells when days are short and there can be continuous heavy cloud cover.

If a portion of home batteries all conk out at around the same time during periods of lousy weather, they won’t consistently reduce peak demand and this means those batteries won’t help reduce the need for expensive grid capacity upgrades.  It doesn’t matter if it only happens once a year or once every several years, it still means they can’t be relied on to always reduce peak demand.

But periods of free midday electricity solve this problem.  It provides a strong incentive to charge batteries every day, so they’ll enter every peak period fully charged or close to it.  This will allow home batteries that otherwise could not be counted on to consistently lower peak demand, making the federal battery rebate and the Solar Saver Offer complementary schemes.

Free Electricity Won’t Be All Solar

In summer, there will often be enough solar generation to meet the increase in electricity consumption during free electricity periods.  But at times, especially on cold and cloudy winter days, meeting electricity demand will require water in hydroelectric dams to be run down, gas to be burned, and coal generators to increase output.  But this is okay.  Plenty of clean energy that otherwise would have been curtailed will be used instead of going to waste, and it will reduce the need for fossil fuel generation at other times.  The total amount of fossil fuels used will also rapidly decline as we build more solar, wind, and battery capacity.

Savings For Everyone – But Some Everyones More Than Other Everyones

The Solar Sharer Offer is not going to be a dream scheme where you get 3 hours of free electricity tacked onto your plan with no drawbacks.  Despite this, free midday electricity plans will still be worthwhile for a huge range of households.  The greatest benefits will go to those with batteries and/or EVs, and those who put their electric hot water systems on timers.  But by lowering generation costs and reducing the need for grid upgrades, they will lower costs for everyone, including those who don’t use the plans.  This includes renters without any access to solar, batteries, or timed electric hot water.

But don’t expect miracles.  Reductions in average generation costs will be minor compared to total electricity bills, and the main benefit — reduced need for grid upgrades — will be gradual in effect.  But it will lower costs, which is infinitely better than raising them, and will also benefit the environment as it increases the rate we switch away from fossil fuels.  This includes oil, as the Solar Sharer Offer will allow many EV owners to drive for free.

For more detail on the Solar Saver plan, read our explainer on how it will work. For another perspective, read SolarQuotes founder Finn Peacock on his concern that the scheme will slow down solar uptake.